Santa Clara County economy ranked best performing

SAN JOSE -- Santa Clara County is the best-performing metro economy in the nation -- and has a good shot at staying at or near the top for years to come, analysts said Thursday.

For the first time since 2001, the South Bay claimed the top spot in a closely watched annual survey of the nation's best-performing metro regions conducted by the Santa Monica-based Milken Institute.

"Silicon Valley Is Back" is the title of the report, which was released Thursday.

The San Francisco-San Mateo-Marin region was No. 36, up from No. 57 in 2011. The East Bay was ranked No. 155, up from 168 in 2011. The survey ranked 200 major metro areas in the United States.

San Jose and its surrounding regions returned to the top of the pack because of the income and wealth creation of Silicon Valley's remarkable technology sector, according to the report.

"The San Jose metro area is the leading innovation and technology ecosystem in the world," said Ross DeVol, chief research officer with the Milken Institute, a nonprofit financial think tank.

The South Bay's top ranking for 2012 contrasts sharply with its position in 2011, when it was placed No. 51.

"You would expect the South Bay to top the list," said Jordan Levine, director of economic research with Beacon Economics. "The South Bay has led the recovery in the nation."

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Santa Clara County has consistently been at or near the top in recent monthly reports by the U.S. Labor Department on the rates of job growth in the nation's major metro regions.

"The economy is impressive in the South Bay," said Jeffrey Michael, director of the Stockton-based Business Forecasting Center at University of the Pacific. "You not only have strong job growth, but you also have income growth in the South Bay."

Silicon Valley may not produce as much tech equipment as it once did, but much of the world's output is envisioned and designed there, the report determined.

Analysts believe Santa Clara County has a good chance to remain at or near the top in coming surveys.

"I would expect the South Bay to remain strong," said Michael Yoshikami, CEO of Walnut Creek-based Destination Wealth Management.

Image from the cover of the Milken Institute report, January 2013.

The Silicon Valley economic rebound driven by the tech sector is lifting all of the proverbial boats in the South Bay.

"San Jose's recovery has spread throughout the regional economy, thanks to the high multipliers associated with the tech industry," according to the report. For each job added to the technology industry, two professional positions and three nonprofessional jobs are created, it stated.

Cupertino-based Apple (AAPL), for example, which is believed to employ 34,000 in its hometown, has indirectly created an additional 170,000 jobs throughout the South Bay, the report estimated.

Underscoring how technology is driving economic recovery nationwide, 12 of the top 25 metro areas were tech-oriented geographic regions.

Other locations in the top 10 include the metro regions of Austin, Texas; Raleigh, N.C.; Washington, D.C.-Northern Virginia; Salt Lake City; and Cambridge, Mass.

"Technology has bounced back very strongly," Yoshikami said. "Tech is an industry whose strength is spreading to other markets. Tech has a huge impact on a local community in terms of job creation, wages and retail activity."

Contact George Avalos at 408-373-3556 or 925-977-8477. Follow him at Twitter.com/george_avalos.